Turnbull flags city deal expansion

Malcolm Turnbull has flagged expanding his idea of "city deals", announced during the election, to the capital cities in a bid to make housing more affordable.

The prime minister is rolling out city deals for Townsville, Launceston and Western Sydney, in a bid to get local, state and federal governments working more closely.

But as the housing affordability debate heats up ahead of the May federal budget, Mr Turnbull has suggested similar deals for capital cities.

"What we are doing as we set up our city deals ... is reach agreement so that as commonwealth funding is made available for road or rail or whatever that is then part of a deal and a commitment to deliver, for example, more dwelling approvals," Mr Turnbull said.

He said housing approvals had been "very slow" and incentives were needed to get things moving.

"Conditioning federal government investment into cities in return for appropriate planning measures ... will deliver, over time, greater supply of housing," he says.

Labor says the government should not ignore cutting back on negative gearing and capital gains tax concessions.

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The federal opposition also says the government has cut funding for homelessness services and failed to work with states and territories on meaningful housing policy.

Under the Townsville city deal signed in December, the three levels of government agreed on a 15-year plan covering new sports and arts facilities, rail, water, defence industry, education, roads and digital connectivity.